Advertisement
Singapore markets closed
  • Straits Times Index

    3,224.01
    -27.70 (-0.85%)
     
  • Nikkei

    40,168.07
    -594.66 (-1.46%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Bitcoin USD

    70,830.90
    +2,196.50 (+3.20%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,255.73
    +7.24 (+0.14%)
     
  • Dow

    39,810.26
    +50.18 (+0.13%)
     
  • Nasdaq

    16,383.74
    -15.78 (-0.10%)
     
  • Gold

    2,239.60
    +26.90 (+1.22%)
     
  • Crude Oil

    83.03
    +1.68 (+2.07%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • FTSE Bursa Malaysia

    1,530.60
    -7.82 (-0.51%)
     
  • Jakarta Composite Index

    7,288.81
    -21.28 (-0.29%)
     
  • PSE Index

    6,903.53
    +5.36 (+0.08%)
     

Branded cannabis products are 'wave of the future': Green Thumb Industries CEO

Green Thumb Industries CEO & Founder Ben Kovler joins Yahoo Finance's Zack Guzman to discuss the cannabis company's latest earnings results amid the coronavirus pandemic.

Video transcript

ZACK GUZMAN: Want to spotlight shares of Green Thumb Industries, a Chicago-based cannabis company. There, we're seeing shares in the company up more than 1 and 1/2 percent after they reported earnings after the bell yesterday. Second quarter results topping $100 million in total revenue for the second consecutive quarter. Total revenue came in just shy of $120 million, up 16.6% quarter over quarter. The company also reported adjusted EBITDA of $35.4 million, well above analysts' expectations in yet another quarter of strength for another multi-state operator here in the cannabis sector.

And for more on the quarter, as well as what the space is shaping up to do in the back half of 2020, we're joined by Green Thumb Industries founder and CEO Ben Kovler. And Ben, good to be chatting with you again, my friend. Congrats on the momentum here. And it's not just you guys. I mean, we've seen this across the country, specifically in Illinois, though, ever since cannabis sales have become legalized back in January, some pretty strong growth. So what do you attribute what you guys are doing there at Green Thumb versus the overall sector that made this such a successful quarter for you guys?

ADVERTISEMENT

BEN KOVLER: Sure, thanks for having me, Zack. It's great to be here. I really think it's the same story. This is early innings for US cannabis. And this brand-new, multi-billion dollar industry is unfolding in front of our eyes. And Green Thumb is optimally positioned to take advantage of that as policies opening up regulated legal cannabis sort of sweep the nation.

And Illinois is a perfect test case and example of what other states can see in their future.

ZACK GUZMAN: When you think about the opportunity out there, we've been having a lot of discussions about how it's shifting. Now, you know, there's obviously medicinal benefits here. That's a big piece of the business. And for you guys, you have 48 retail stores across 10 states here, notably based in Illinois. I assume that's a big battleground for you guys.

But what are those opportunities you're most focused in on, whether it is, right now, branding, or expanding to multiple states and growing at your retail footprint? What are you most focused on now?

BEN KOVLER: Sure, I mean, our core mission is promoting well-being through the power of cannabis, and whether it's medical products that are helping people, and whether it's helping with the opioid epidemic, or its adult-use cannabis products that the American consumer really wants. So within our portfolio, in Illinois, that recently legalized on January 1st. And It's shown tremendous growth. We think there's tremendous growth ahead. Or whether it's Pennsylvania with a massive medical market on its way to adult use eventually, ripe for a massive tax revenue windfall, as they do that. Or New Jersey, where it's on the ballot in November, or Maryland, or Connecticut, New York, Massachusetts, Ohio.

This is the Green Thumb portfolio. And we are set up to take advantage of that. We believe this is a branded consumer product that can develop an honest relationship with the consumer, right? The US consumer is our target audience. And we think branded cannabis products are going to really be the wave of the future.

ZACK GUZMAN: And we've seen that too. I mean, you guys announced the partnership a week ago with Cookies, the brand there, not just of really a cannabis brand. They say they're a lifestyle brand. We've heard that even from Canopy Growth former CEO Bruce Linton hyping up the Cookies brand on our show. But what does that say about branding at this stage of the marijuana sector maturing? More people getting familiar?

And it's not just doing marijuana, smoking marijuana, consuming marijuana in whatever capacity now, but really attaching themselves to those specific brands and the effects that come with them.

BEN KOVLER: Sure, we think Cookies is one of the most exciting lifestyle brands in cannabis out of northern California, that we can bring a Cookies on the strip, retail destination location, and offer that experience to every tourist that is coming to Vegas in the must-visit cannabis location, right? High-quality product, authentic brand that appeals to consumers. All you have to do is look at the Cookies opening to see the kind of enthusiasm amongst the audience.

ZACK GUZMAN: And when we talk about the overall country, right, we've heard timelines from a lot of your competitors out there, Curaleaf, we've checked with Joe Lusardi multiple times on the show. We just had David Kline on earlier in the week talking about his timeline. He says about 2022 is when we should expect full federal legalization here.

But we did see Joe Biden name Kamala Harris his running mate. And she introduced the More Act, which would not only federal legal-- legalize marijuana at a federal level, but also expunge the records or seek to expunge the records of cannabis convicts. What does that do, maybe, to your timeline when you think that this will get passed here in the US and how it could be a bit closer than people think?

BEN KOVLER: No change for us. We believe this is prohibition 2.0, and that brands distributed at scale is going to be how to win, and that it's inevitable, over time, where we are headed. However, in the near term, we're focused, really, on the states. We do not think that the federal government moves very fast on anything. And so we're very comfortable with the current situation. And particularly, we see state governments opening up to legalized, regulated cannabis. Because they need two things, right?

There's economic softness. They need jobs and tax revenue. And as these state markets solidify, and they become really strong growth engines, those are going to be powerful mini economies within the larger economy. We see federal policy moving towards banking regulations, easing of 280-E, decriminalization, expungement, many kinds of things that happen on the federal government, banking, capital markets, et cetera. It just takes time, step by step.

ZACK GUZMAN: On that front, I mean, when we talk about it, obviously, there's a few different ways you can judge a lot of the multi-state operators in the space right now. You can look at how many states they're operating in. You could look at the revenue growth. You guys are posting impressive-- as we noted-- revenue growth already. And we saw the price targets on your stock get boosted from Callen and Piper Sandler after you reported those earnings.

But when you think about how a federal legalization might change the state-by-state battles going on right now, I mean, you guys have licenses for 96 retail locations across 12 states. So when you think about that, does it maybe equal the playing field when we get to a place where it doesn't necessarily need to be so closely watched state by state? Or how would that play out in your mind?

BEN KOVLER: Well, we love our portfolio, which has a ton of optionality, and unique assets, and unique market. So regardless of federal policy, which, if it went full circle, all the way like you alluded to, there's still municipalities and local regulations. We think we're optimally positioned with branded cannabis production and a distribution platform unlike anybody else.

So in the pre-roll category, we think Dog Walkers, which as our brand of pre rolls, will be in every one of US consumers' hands soon. And then, as the walls come down, it's not going to matter where that's necessarily made so long as Dog Walkers are what consumers are using.